THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We believe there`s a very good chance Madeleine is out there.

UNIDENTIFIED FEMALE: There is a real possibility that Madeleine can still be found alive.

UNIDENTIFIED FEMALE: Madeleine McCann was 3 years old when she disappeared from a resort. Now British police say they have new leads and are reopening the investigation. They want to question 38 people across Europe, including 12 British nationals.

UNIDENTIFIED MALE: The authorities in this country are now actively pursuing Madeleine.

UNIDENTIFIED MALE: They say this new evidence was a development after combing through more than 30,000 pages of documents related to the case.

UNIDENTIFIED FEMALE: Her parents have worn the grief and anguish on their faces day after day.

(END VIDEO CLIP)

NANCY GRACE, HOST: Good evening. I`m Nancy Grace. I want to thank you for being with us.

Bombshell tonight. In a stunning turn, Scotland Yard announces baby Maddy McCann may be alive. That`s right, in a stunning turn of events, Scotland Yard doesn`t just investigate the possibility that she may be alive, they make a formal announcement this child is very likely still alive this many years later, this after her parents had come under suspicion, many others had come under -- falsely under suspicion. Maddy McCann alive?

Tonight, across the ocean, joining us, Jerry Lawton, senior true crime correspondent with "The Daily Star." Jerry, this is an incredible turn of events, especially with Scotland Yard, they keep everything so close to the vest, to make a public and formal announcement that baby Maddy McCann is very likely alive. Not only that, that a special cop squad has been set up to find her and run down 39 active leads in the case, Jerry.

JERRY LAWTON, "DAILY STAR," (via telephone): Incredible, Nancy. I mean, it`s an astonishing development on the story, six years on since Madeleine actually disappeared.

We were summoned to a police briefing. As you say, Scotland Yard normally play their cards very close to the chest, particularly on something like this. It was quite exceptional circumstances.

And yes, at that briefing, the officer who has been appointed in charge of a 37-strong team of UK detectives now actively hunting Madeleine worldwide made the announcement that he has read all the original case files, he`s read all the files of the seven or eight teams of private detectives that the McCanns hired to try and find their daughter.

They have read everything, and he said on the record there is not one shred of evidence he has seen that suggests Madeleine is dead. Therefore, they are actively assuming that she is still alive. Incredible development.

GRACE: Straight out to Mike Walker, senior editor, "National Enquirer." Mike, what do we know?

MIKE WALKER, "NATIONAL ENQUIRER" (via telephone): Well, one of the things the police are basing this idea on is that in 2010, a guy named Wayne Hewlett (ph), who is the son of a pedophile, convicted, named Raymond Hewlett (ph), told a British newspaper that he received an unnerving letter regarding the case from his father, who`d died a week before.

Now, this guy is on his death bed, OK? He has no reason to lie, this pedophile. And he got drunk and he let it out in front of his son that he`d stolen Maddy to order as part of a gang. He said the gang had been operating for a long time. It was based in -- a gypsy gang in Portugal -- had been operating a long time.

And what they did was, they would pinpoint children, send a photo of the kid to couples who couldn`t have children of their own and who subscribed to their, you know, so-called service. And then if the person said, yes, I like this little girl -- and Maddy was a very beautiful little girl -- they would go and kidnap the child. And that`s what this guy said that he did, and the child was taken out the country, across the border into Spain.

GRACE: Out to Matt Zarrell, covering the story with me. Matt Zarrell, there have been a lot of developments, a lot of focus on a tall, thin, scraggly, dark-headed male on the beach the day baby Maddy disappeared, taking photos of children. What do you know, Matt?

MATT ZARRELL, NANCY GRACE PRODUCER (via telephone): Yes. Files reveal that on May 9th of 2007, officers interviewed the owner of a restaurant on the beach, which is about 20 minutes from where Maddy McCann was staying. And the owner recalled seeing the McCanns with their three children for (ph) the last time at the restaurant. And they revealed that they saw a strange Englishman who was spotted taking pictures of children on the beach visited by Maddy just before she went missing.

And British police were told that Madeleine had been abducted three days after being photographed by a spotter. Now, police have not located this spotter, but it is definitely a theory that they are looking at right now.

GRACE: Not only that, Alexis Tereszcuk, senior reporter, Radaronline.com -- for those of you just tuning in, a stunning development by Scotland Yard, who comes out and makes a formal announcement they believe baby Maddy McCann may very well be alive.

Years have passed since baby -- baby Maddy goes missing while her parents are at a luxury resort. That evening, they were eating about we thought 100 yards. Now it has been narrowed down to 100 feet away -- about 100 feet away, the McCann apartment, basically across the pool at a tapas restaurant, and an adult would be sent back to the apartment every 30 minutes to check on the children.

Now, isn`t it true, Alexis Tereszcuk, that one of the other parties, one of the other members of the dinner party, went back and they saw a man carrying a child wrapped in a blanket, but they didn`t put two and two together?

ALEXIS TERESZCUK, RADARONLINE.COM: You`re exactly right. And this is something that was a distraction, actually -- well, no, it wasn`t a distraction, but the police were only focused on Madeleine`s parents. And so the people with that were with her actually said that they saw someone else carrying this child. This could have been their daughter.

But the police only focused on the parents for years, in fact, and they ignored so many other leads, so that with this new investigation opening, they`re going to look into everything, and this is one of the things that they`re scrutinizing because this could be a huge lead. They just -- they didn`t know at the time. They didn`t realize that what they saw could have been the child that would end up missing. It just wasn`t something that entered their thought process.

But now the police are absolutely focusing on this. And they`re trying really hard to track down every last detail. They are revisiting every single tip, every single lead, and they do feel like they`ve narrowed it down. But the parents and this other couple, none of them are considered suspects. So the 38 people, none of them...

GRACE: But what`s interesting...

TERESZCUK: ... are included in this.

GRACE: What`s interesting about it, Marc Klaas, president, founder, Klaas Kids Foundation, is that evening, they were actually afraid to bring in a hotel baby-sitter because they didn`t want somebody with the children, Maddy and her twin siblings, that they didn`t know. They were afraid that a baby-sitter unknown to them could hurt the children, would ignore the children. So they thought one of them going back every 30 minutes to check on the children would suffice.

MARC KLAAS, KLAAS KIDS FOUNDATION: Whoops, Nancy. They made a critical mistake there. You should never leave young children unattended. And in fact, in the United States, I believe it`s against -- in California, I know it`s against the law to leave very young children unattended.

The parents came under fire when baby Maddy went missing. It turns out that there had been DNA reportedly found in the trunk, their car trunk, that matched baby Maddy. But when it was all said and done, Renee, it turns out that this car was rented 25 days after Maddy went missing.

RENEE ROCKWELL, DEFENSE ATTORNEY: Well, Nancy, a little interesting that they would make such a big deal. Doesn`t it smack of JonBenet Ramsey to you? Aren`t the parents the first suspects and the first ones that need to get excluded?

But in a situation like this, you just got to hit it and move on. Ask Marc Klaas. He manned up. He showed up. He answered all the questions. You hit it, and you move on.

GRACE: Well, Parag Shah, I don`t think that the McCanns, as opposed to other cases -- I do not believe the McCanns are in any way responsible for Maddy`s disappearance. But the reality is, Parag, is that parents have to expect to be a prime suspect because statistically, they are the ones responsible when children go missing or are killed.

In this case, I don`t think that that is true. But you know, that comes with the territory of being a parent. When something happens to your child, you`re the first one the cops look at. That`s just the way it is because statistically, it`s true.

PARAG SHAH, DEFENSE ATTORNEY: Yes, and that`s ridiculous because the way people should be arrested or suspects is with evidence, and these 38 suspects that they have...

GRACE: OK, I don`t know what you just said...

SHAH: I hope they find this girl...

(CROSSTALK)

GRACE: ... the way people should be arrested is with evidence? I don`t know if that`s even a sentence.

SHAH: Well, what happens is there`s a rush to judgment and somebody...

GRACE: Parag Shah, I don`t know...

(CROSSTALK)

SHAH: ... going to be arrested on this...

GRACE: Nobody`s been arrested, Parag.

SHAH: They have 38 suspects...

GRACE: They were not arrested, Parag. I don`t know what you`re talking about. They were not arrested.

SHAH: They weren`t arrested, but they were highly scrutinized, which there was no basis...

GRACE: Well, then -- OK, why don`t you...

SHAH: ... and just because parents --

GRACE: ... deal with the facts we`re talking about right now? They were not arrested. They were suspected and -- put him back up, please!

SHAH: Unfoundedly!

GRACE: Parag, have you -- Parag, I assume that you`ve tried murder cases, have you not?

SHAH: Yes.

GRACE: OK. Just out of curiosity, it`s neither here nor there, but how many, one?

SHAH: I`ve tried multiple murder cases.

GRACE: OK. So two. That`s good. Parag, the reason -- there is a reason that parents are the first suspects, that husbands are the first suspect when a woman, a wife or a girlfriend goes missing because, statistically -- you know what? Let Marc Klaas...

SHAH: This is different, though!

GRACE: ... tell you...

(CROSSTALK)

GRACE: Please cut his mike.

SHAH: ... they had those same 38 suspects...

GRACE: Number one...

SHAH: ... back then, as well.

GRACE: ... it`s 39, and they`re not suspects. They are leads. But Marc, could you please explain to Parag Shah why parents, such as you or me, would come under suspicion first.

KLAAS: Well, because, as you said, the statistics take you there. In the vast majority of cases involving child victims, the parents are the ones involved. Unfortunately, it`s a reality that has to be dealt with.

The McCanns had to deal with it, and they just couldn`t get past the scrutiny of the authorities, and I think that that really tanked the case back six years ago.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Madeleine McCann was 3 years old when she disappeared from a resort.

UNIDENTIFIED FEMALE: It`s important that people know what I saw because, you know, I believe Madeleine was abducted.

UNIDENTIFIED FEMALE: I don`t think we can say 100 percent. I mean, you know, we`re realistic, but what we do know is there`s a very good chance that she is alive.

UNIDENTIFIED FEMALE: Police say they have new leads and are reopening the investigation called Operation Grange.

(END VIDEO CLIP)

GRACE: Out to Jerry Lawton, senior true crime correspondent, "Daily Star." Everyone, for those of you just joining us, in a disturbing and surprising about-face, Scotland Yard, police, have now announced that Maddy McCann may very well be alive. The general public had decided that Maddy McCann was dead shortly after her kidnapping. Not true.

To Jerry Lawton, joining us from "The Daily Star." Jerry, what has made them come to this announcement?

LAWTON: Well, Nancy, basically, it`s the hard work of Gerry and Kate McCann, Madeleine`s parents, who since she disappeared and despite, as you touched earlier, the scrutiny upon them, they`ve continued to fight a single (ph) campaign on their own, basically, to get people to continue to look for their daughter.

The Portuguese police archived the original case in 2008 as an unsolved mystery, and the McCanns refused to accept that, hired private detectives, and continued to, basically, fight a campaign to get somebody to look for her. They appealed directly to British prime minister David Cameron, and he listened to them. They had a direct meeting with them. He ordered British police to launch a review of original investigation, which they spent two years and 5 million British pounds doing.

And as a result of looking at those files, they have seen a whole host of unsolved leads that the British police don`t believe have been investigated, traced and eliminated to a standard that they require. And that is the process that they are now embarking upon.

They`ve still only made their way, Nancy, through two thirds of the file. There`s another one third to go. But it`s taken two years to get to that point. So you can imagine the volume of information that they are sifting through. And basically, the British police have said there are too many leads here, there`s too much that has not been done, we need to start over and do it properly.

GRACE: To Mike Walker, senior editor, "National Enquirer." What do you know about a taxi driver who has sworn under oath that he picked up Maddy McCann with a woman and three men the night she disappears?

WALKER: Yes. And he said also that he noticed a little -- Maddy had a little black spot in one eye that made her look a little bit distinctive, and he saw all that.

Now, incredibly, Nancy, this cab driver said that he was dying to be interviewed by the police, let everybody know what he had seen, and no one ever interviewed him. And that`s another possible lead here that has surfaced. And then, of course, there was the other one. Did you hear about Posh Spice or a woman...

GRACE: The lookalike? Yes, tell me.

WALKER: She looks like -- what`s her real name? I keep calling her Posh Spice.

GRACE: Victoria Beckham, Posh.

WALKER: Right. And -- Victoria Beckham. And -- and -- remember, I said that the pervert, pedophile, confessed on his death bed that a Portuguese gang -- he had helped kidnap the child for a Portuguese gang. They took her over the border into Spain.

Now, here`s another little connection that they`ve discovered. A woman -- there were reports of a woman who looked like Victoria Beckham in Barcelona, Spain. And three or four days -- four days, I guess it was- yes, May 7th, 2007 -- at a marina acting very agitated And she had possibly an Australian accent, but she spoke fluent Spanish. And she was asking, she was approaching men and saying, Are you here to give me my new daughter?

It was as if she had been told to go there and meet somebody, and she got agitated and wasn`t sure who she was supposed to meet, and she kept asking, Are you here to deliver my new daughter?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: New details in a 6-year-old cold case

UNIDENTIFIED FEMALE: Police now say they think this little girl, Madeleine McCann, may still be alive.

UNIDENTIFIED MALE: They say this new evidence was a development after combing through more than 30,000 pages of documents related to the case.

UNIDENTIFIED FEMALE: Well, we`re hoping that this actually leads to something more promising.

UNIDENTIFIED FEMALE: I don`t really want them to have the burden of this, of having to keep looking and looking and looking and not being able to stop, you know? So we need to find her now.

(END VIDEO CLIP)

GRACE: Is Maddy McCann alive? A stunning announcement by police that this child may very well be alive. They have called in all that they can, all the manpower, all the feet on the ground. They`ve created what is called a cop squad to find baby Maddy.

Mike Walker, senior editor, "National Enquirer," could you repeat the story? Now, this goes back to a cab driver that swears he picked up Maddy McCann with one woman and three men the night after she goes missing. Repeat?

WALKER: Yes, that`s exactly right. And he said that he saw the little black spot in one of Maddy`s eyes. It was very distinctive. And he`s absolutely sure it was her.

Now, again, you know, who knows if it was, but he is very, very sure. And all these years, he has asked and begged for the Barcelona -- the Portuguese police to interview him, and they never have. They closed this case down a year after it started, and that`s been it ever since.

Luckily, as you say, now Scotland Yard has stepped in with the British prime minister behind them and really launching something. And they`ve put together a bunch of leads, the kind of stuff that we are reporters, newspaper reporters, would be after if we had, you know, 5 million pounds to spend.

But this may just do it. And the reason there`s so many people, Nancy, involved is they`re not dealing with 38 separate, you know, suspects. They`re dealing with, obviously, gangs, rings, in other words, where, you know, you might find one ring of kidnappers, and there would be, you know, 15 or 20 people involved.

GRACE: Out to the lines. Patrick in New York. Hi, Patrick. What`s your question?

UNIDENTIFIED MALE: Hi Nancy. Love the show. I was just wondering what new evidence they`ve found that suggests that she`s still alive.

GRACE: You know what? Jerry Lawton, I`m going to go to you on that - - Jerry Lawton with "The Daily Star."

LAWTON: Hi, Nancy. Yes, I`m afraid it`s a negative, rather than a positive answer. Basically, we were told by the police who called us in to a press briefing at Scotland Yard that it`s based purely on the fact that they`ve not found one shred of evidence suggesting the opposite, that she is dead.

They have looked at multiple theories (ph), thousands and thousands and thousands of pages of witness reports, documentation. Work has been done by Interpol worldwide following up leads and sightings, and there is no evidence, particularly in the forensic area, to suggest that Madeleine is dead. Therefore, they are -- until they believe otherwise or find otherwise...

GRACE: Right.

LAWTON: ... they will go on the basis that she could well still be alive. Obviously...

GRACE: To Greg Kading, former LAPD...

(CROSSTALK)

GRACE: ... author of "Murder Rap" -- Greg, it`s very disturbing to me that all of these people -- there`s a string of them -- were not interviewed by police. How does that happen?

GREG KADING, FORMER LAPD DETECTIVE: It does happen, unfortunately. And you know, things fall through the cracks. An investigation is only as good as your investigators. And so if you have complacent investigators or incompetent investigators, well, that`s how your investigation is going to end up.

This is very encouraging, however, that there`s this new specialist task force, you know, with specialists involved who will -- who will re- look at everything with fresh eyes. And you have all this compelling corresponding information with a -- you know, with spotter, and you`ve got, you know, somebody saying that they saw the child later. I mean, this is a tremendously encouraging situation for Scotland Yard.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Big headline from this is police believe that she may still be alive.

UNIDENTIFIED MALE: Certainly no evidence to suggest otherwise.

UNIDENTIFIED FEMALE: Madeleine McCann -- British police say they have identified more than three dozen people of interest in her disappearance.

UNIDENTIFIED MALE: They identified 38 suspects.

(END VIDEO CLIP)

GRACE: The parents of baby Maddie McCann never giving up in the search for baby Maddie. I want to refresh all of your recollections as to the events surrounding her disappearance that night. Out to Mike Walker, National Enquirer. Mike, if you could, please go back through the facts very carefully about the night she disappeared.

WALKER: The night she disappeared, the parents had been, as you said, checking on her. They were having dinner with some people about 300 yards away from -- pardon me, about 100 yards, 300 feet away from the room, and they were sitting around a pool. So they could see the room. They were sending somebody over. One of them would go over every 30 minutes or so to check on the children, and then suddenly of course the disappearance.

Now, what happened immediately, when the disappearance was reported, and the police arrived, the first thing the police didn`t do was secure the crime scene. People were walking all over, all around. As Scotland Yard says, you know, destroying what might have been valuable forensic evidence, or maybe not.

The next thing that happened was the police just decided arbitrarily that because both of these people were doctors, one of them a very respected cardiologist and his wife a very respected general practitioner, doctors, they decided what they were doing probably was drugging the kids so that they would stay asleep and not be a bother, and probably that`s what happened here, and she overdosed the kid and the kid died, and so they got rid of the body. Question, Nancy. Where do you get rid of a body? OK? They tried to say that rented car had DNA evidence traced. It was later proven to be wrong, wrong forensic testing. But you know, what did they do? They secretly kept the baby somewhere under the bed in the rental place where they stayed, under police supervision all those days? No. You can`t hide a body like that. Very hot in Portugal that time of year. Bodies decompose very quickly. So there`s in way that anybody can say there`s any evidence that the child had died.

And even when the Spanish -- Portuguese police brought in corpse sniffing dogs, they said we sniffed your car keys and we had a trace of a dead body. There you are. And as the doctor, as the wife pointed out, she said I handled six dead bodies just days ago, before I came to Portugal for my vacation. That`s what I do. I`m a doctor. And so there`s no evidence that the child died, but there`s a lot of evidence mounting that she may still be alive.

GRACE: And not only that, Mike Walker, police had also said they found baby Maddie`s DNA behind the sofa in that hotel, that resort hotel room. That turned out to be false. The DNA that they claimed was baby Maddie`s DNA in the car, the rental car was not her DNA. And not only that, the rental car had been rented 25 days after she disappeared.

WALKER: And the lead detective in the case, the Portuguese detective was bounced off the case after about five months, God knows why, but he then went on to write a book saying that the McCanns were killers, and he made a half a million dollars from that book.

GRACE: I hope he was sued. Was he?

WALKER: Yes, he was.

GRACE: Was it successful?

WALKER: Yes.

GRACE: With me, Mike Walker, senior editor of "National Enquirer." Also with us, Jerry Lawton, true crime correspondent, "Daily Star." What can you tell me, Jerry, about a man in the stairwell spotted by more than one witness in the stairwell near Maddie`s resort room, just 24 hours before she vanished?

JERRY LAWTON, DAILY STAR: This is a girl that`s (ph) wearing sunglasses. This is just one of approximately eight suspicious characters seen in and around the apartment within 48 hours of Madeleine`s disappearance, none of which the police have determined have actually been traced or eliminated from the investigation. Hence why there`s so much excitement. This was a guy who was spotted by (inaudible), virtually a prowler, looking suspicious, wearing sunglasses. No apparent reason for him to be there. The apartment itself is within a block of a holiday compound. He has never been traced. Amazingly, many of the people who actually stay in the neighboring apartments have never still to this day been questioned about Madeleine`s disappearance, and they were in those apartments the night she disappeared.

GRACE: Unleash the lawyers, Renee Rockwell, Parag Shah joining us. I usually don`t pile on the police, because I firmly believe that for the most part they are doing the best they can under the circumstances at the time of the incident. But in this particular case, I think it was horribly botched. They were at a resort in Portugal. The cops did not treat it as a crime scene. It was not roped off until, I think, the next day. Hotel personnel had been tromping in and out. Tons of people had come in and out. Whatever evidence may have been there was completely destroyed. The little animal that she slept with, cuddle cat, had not been tested for DNA. It was found on the floor. You know, there, the borders of the country are like going from state to state in the U.S. The countries are not huge. You can get to the country`s borders fairly quickly. They didn`t close down the borders. There were tons and tons of police mistakes, Renee.

ROCKWELL: You got to wonder, Nancy, had they been vigilant, would this child still be gone. This is a human trafficking case. You can get $200,000 for a beautiful child like that, and you got to wonder is the child in Australia, is the child in Barcelona. It`s a crying shame.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Help from private investigators has made a difference.

UNIDENTIFIED FEMALE: There`s a very good chance she`s alive and there`s certainly nothing to suggest otherwise.

UNIDENTIFIED MALE: Really it`s important not to give up on Madeleine.

UNIDENTIFIED FEMALE: This, they are having to keep looking and looking and looking and not being able to stop, you know. So we need to find her now.

UNIDENTIFIED MALE: (inaudible) she`ll be found. (inaudible).

UNIDENTIFIED FEMALE: Police are hopeful. Authorities are asking the public to help find this little girl, wherever she may be.

(END VIDEO CLIP)

GRACE: Take a look at the shots of Maddie McCann. I still call her baby Maddie. Liz, if you could show me several shots of her. It is her right eye as you`re viewing it, you`ll see it on the left, that has a very peculiar black mark in the middle of the iris. There you go. She`s absolutely a gorgeous child, too. Medical examiner, forensic pathologist and toxicologist, Dr. William Morrone, joining me tonight out of Madison Heights. Now if someone were to find a child that looks like baby Maddie, how quickly can it be determined if it`s really her and what is the process?

DR. WILLIAM MORRONE, FORENSIC PATHOLOGIST: If the authorities are in a large city and they have a university that`s reasonably equipped, they can identify her in 24 to 48 hours. But if they`re in some third world country or a rural setting, it`s going to take a couple of days. They`ll want to get dental records, want to get a DNA swab, they`ll want to get some medical records, and they will compare it to the DNA standards of the parents, which can be sent over the computer. But doing the DNA analysis on Maddie McCann, the suspected Maddie McCann, is going to take a couple of days and they`ve got to get her to a major city or a university to do that kind of work.

GRACE: What is the mark on her eye? What is that?

MORRONE: There`s pigment in the body that`s put in different places. Like the color around your iris, it`s a specific pigment that`s generic, and black specks have been put in the eye by design to reduce glare and sunlight, so that people from Northern European areas where eyes are green and blue, can tolerate the sunlight just as good as people with brown eyes. People with brown eyes tend to tan better and they don`t have the need for sunglasses. So it`s an adaptation we`ve had over thousands of years.

GRACE: Dr. Morrone, while I still have you, let me ask you this. Referring to the DNA that was in the car and the DNA that the police claim that they found behind the sofa in her rental unit, how is it that DNA can become so degraded it can no longer be used for official testing?

MORRONE: DNA is chains and strands of amino acids. And when there`s erred (ph) segments, they`re missing, they`re chopped out. And the police, with the technology at that time, tried to say, OK, this is the parents` DNA and we have some other DNA here, but there was obviously something missing, and they made some assumption. We`re much better at this, and the DNA technology has really exploded. But they made assumptions that were incorrect because of missing pieces they thought they could match up other parts. It`s like a puzzle.

GRACE: Right.

MORRONE: It was a bad move on their part, way too early.

GRACE: To Marc Klaas, president and founder of Klaas Kids Foundation. Marc, what do you believe in regards to that area of the world, as far as human trafficking. And I don`t mean just sex trafficking. I mean trafficking for adoption purposes.

KLAAS: Sure, this is baby trafficking. I think that six years later they`re going to under -- it will be an enormous challenge to be able to track down a Gypsy gang, because they tend to be very transient anyway, to be able to bring this together. But Nancy, the one thing that`s really clear is this is all happening now because of the McCanns` dogged determination to find out what happened to their daughter. That`s not the hallmark of guilty parents. It`s obvious there were huge errors made at the beginning of this investigation, and that`s why they`re in the situation they`re in now. You know, the fact that the prime minister of England has taken a personal interest in this, I think is really the driving force behind this current investigation.

GRACE: You know, to you, Jerry Lawton, senior true crime reporter joining us from the Daily Star. Everyone, it`s a parents` worst nightmare. You take your children on vacation, and they`re stolen from their rental unit, never to be seen again. British police now believe Maddie`s kidnapper may have been staying in one of the apartments very near the McCann family. What do you think?

LAWTON: Well, I think all options are open. It is indeed possible, and one of the reasons it is possible you`ve touched on is the poor investigation in the early stages. There`s a phrase that a police friend of mine uses over here on any investigation (inaudible) when a child goes missing, and that is clear the ground beneath your feet, and that means you start at the point where she was last seen, and you literally clear absolutely everything around there, working outwards, systematically and methodically, to try and determine what happened to her.

That has clearly not happened here. As we`re aware from the Portuguese police files, which are available to the media and were released following the previous investigation, people who were -- they never even found everyone who was in those apartments, staying in them the night she vanished. People were renting them privately. Some people were renting them through companies. Tour operators were renting them. And the police never did that ground work. So they don`t even know who precisely was in each apartment when Madeleine went missing. So the possibility that one of this possible gang was in that apartment or staying very close by cannot be eliminated at this stage until a far more thorough investigation has taken place.

GRACE: Matt Zarrell?

ZARRELL: Specifically they`re looking at four apartment blocks containing 59 apartments, including apartment 5a, which is where Kate and Jerry McCann were staying with Madeleine.

(COMMERCIAL BREAK)

GRACE: In a stunning about-face, Scotland Yard now says baby Maddie McCann, who was kidnapped off her family vacation, may very well be alive. Alexis Tereszcuk joining us. Senior report, Radaronline.com. What are some of the sightings of Madeleine?

TERESZCUK: Well, the night that she was taken, there was a sighting of her as I`ve spoken about earlier being carried out. There was also somebody as we spoke about in the taxicab. But there have been sightings all over the world of Madeleine. Different people have said they saw her. In fact, they have been very recent. In other spots in Europe, people saying that they suspected another little girl with blonde hair who resembled her. There were some in France, there were in Spain, which is very close to there, so it`s something that the police are looking into again, because this is giving them hope. This is finally people that are spotting this little girl and with the attention it`s brought back and her parents relentlessly staying in the media and keeping attention on their missing child. People are now saying they have seen her around.

GRACE: To Greg Cason, psychologist, Ph.D. joining me out of L.A. If baby Maddie is now found after Scotland Yard is now basically reopening the case, what difficulties, what hurdles will the family have in getting her back and assimilating her back into the family?

CASON: This will be incredibly tough for this family to go through. Because they`re going to have to have a child who does not know them. She was just a few days shy before her fourth birthday before she was taken, and now she`s almost ten. So she`s going to have a life with another family that she now knows as her family. So going back to her parents is going to be a huge adjustment. Plus, her parents are going to have to deal with the trauma of what they went through and having to not only have a huge sigh of relief, but have to deal with all the emotional feelings that have been coming up and been pent up over these last six years.

GRACE: But how do you do it? How do you do it, Doctor? How do you get over the hurdle? What do you do with a child that doesn`t even know you anymore?

CASON: You know, it`s going to take a long time. They`re going to have to acclimate her and have her be a part of the family, tell her the story of what happened. She was probably told the story that if she does have any memories, that her original family didn`t want her. I`m sure that was part of it. Plus, this little girl might be angry that her parents didn`t protect her, that they didn`t keep her from being abducted. So the parents are going to have to take a long, slow re-acclimation process. Work with therapists and other health professionals in order to have them come back together as a family unit.

(COMMERCIAL BREAK)

GRACE: Everyone, Labor Day coming up. We celebrate a very special group of workers, working moms. Are you a working mom? Do you know one who deserves recognition for hard work at home and at work? I want to hear from you. Send us a video explaining why you or your loved one is the best working mom in America. Five videos with the most votes wins my signature handcuff necklace, earrings, t-shirts, the works. Details, go to nancygrace.com. After you go to the website, send in those videos.

Is baby Maddie alive? She`s not a baby anymore. Every parent`s worst nightmare. They took baby Maddie, just a stunning little girl, on vacation with her twin younger siblings. They go to dinner nearby, checking on her every 30 minutes. They find that she has been taken from her bed. With me from the Daily Star, true crime correspondent Jerry Lawton. So many theories circulating, cops looking for a pock-marked male. What can you tell me about that?

LAWTON: Well, the pock-marked male has featured quite heavily since the very early days of the inquiry. And this is something the Portuguese police originally looked at. This was a guy who was seen hanging around the resort three or four days prior to Madeleine`s disappearance. And he was seen basically first of all on the beach. He looked out of place on what is largely a holiday beach. And what is a quaint Portuguese resort. Not a large resort. And this guy seemed to be looking at children from the fun club that Madeleine actually attended during her holiday. I stress Madeleine wasn`t among those girls, but that -- he was showing what was described as an unhealthy interest.

GRACE: They are at the club where they, like a kids club at a hotel or a cruise ship, where parents leave them with babysitters. Everyone, the search for baby Maddie goes on. As we go to break tonight, happy birthday to Shirley Talbert. Mother, grandmother, loved her husband dearly, Dave Talbert, who has just passed on, who fought in Vietnam. She loves arranging flowers, and she bakes the best sugar cookies in the world. Happy birthday, Ms. Talbert. Everyone, Dr. Drew up next. I`ll see you tomorrow night 8:00 sharp Eastern. Until then, good night, friend.